But it also breaks down how British banking ended up in its
current state, with very little competition and a handful of
enormous financial institutions dominating high-street banking.

Three charts
explain the phenomenon.

First of all,
here's how 16 major banks and two building societies just became
the five massive institutions that dominate the
UK. It's reminiscent
of a similar and famous chart made by Mother Jonesshowing just
how many US banks used to exist and how they have been merged and
consolidated into a series of behemoths.

But that's not
actually the full story, because it underestimates the amount of
variety in financial institutions that existed 50 years ago and
has since disappeared. Thebuilding
society, a
mutual sort of deposit and lending organisation, used to be once
of the major parts of British household finance. Building
societies still have significant assets, but their numbers have
plummeted.

In 1960, there were 720 building societies, down from 2,286 in
1900. Today, there are fewer than 10:

Building Society Association, Bank of
England, Cass Business School, New City Agenda

So the UK was left without building societies. But what about
banks? In the US, thousands of small banks exist alongside the
giants. Why not in the UK?

Well, they did. But they started dying off even longer ago. At
the end of the Napoleonic wars, there were more than 700 private
banks, for a population of just over 10 million. These
institutions were run by partners who were personally liable for
their performance.

Over time, they were replaced by a dwindling number of
joint-stock banks (in which managers were not liable for their
performance).

Collins, Presnell, Bank of England, New City
Agenda, Cass Business School

These banks merged with and acquired one another until there were
very few, but the ones that did exist were large and had a lot of
branches. This change, combined with the decline of building
societies over the 100 years after, goes a long way to explaining
why British banking looks so much like a cartel today.